BEIJING, Dec 3 China, one of the world's largest
corn importers, is likely to reject more U.S. shipments of the
grain after they were found to contain a genetically modified
variety not approved by Beijing, traders said.

That has sparked fears that other cargoes could be turned
away, with some traders and buyers warning that uncertainty over
the discovery could prompt a sharp decline in new Chinese orders
for U.S corn.

"We are completely lost and have no idea how to deal with
the situation," said one executive with a major animal feed
mill.

"Not all corn cargoes were blocked for entry, but it is a
messy situation."

An initial U.S. corn cargo was rejected in mid-November due
to the discovery of the same variety, Syngenta AG's
Agrisure Viptera, at a time when U.S. corn exports to China have
been soaring as Beijing grapples with record-high domestic corn
prices and rising demand for food.

Traders have said that the variety, also known as MIR 162,
is set to be approved by China soon. It is already shipped to
destinations such as top corn importer Japan, South Korea and
the European Union.

Slowing Chinese demand would drag further on global prices
that have dropped around 40 percent so far this year on
expectations of a bumper U.S. harvest. Chicago Board of Trade
December futures eased on Tuesday in Asia.

One cargo of about 60,000 tonnes in the southern province of
Fujian was found to be tainted with MIR 162, traders said on
Tuesday.

The same GMO strain was found in another 49 containers,
equivalent to 1,225 tonnes, at the port of Shenzhen, they said.
It was Shenzhen's quarantine authority that last month rejected
one cargo of the grain from the United States containing MIR
162.

"Since this is the same GMO in the latest discovery, the
shipments may have to be blocked for entry," said one trader.

Quarantine officials at Fujian, Shenzhen and Beijing
declined to make immediate comment.

POSSIBLE DELAYS

Buyers said that they were unlikely to place new orders
while shipments were in danger of being rejected.

"The latest discovery is bad news for some buyers ... and
will slow imports," said Li Qiang, chief analyst with Shanghai
JC Intelligence Co. Ltd. (JCI).

Some U.S. exporters have already been in talks with Chinese
buyers over possible delays in existing orders in the wake of
the first GMO discovery, the China National Grain and Oils
Information Center (CNGOIC) said in a report.

The official think-tank earlier estimated China's corn
imports in December would be about 1.75 million tonnes.

China is expected to import a record 7 million tonnes of
corn in the 2013/14 (Sept/Aug) marketing year, up from 5.23
million tonnes the previous year, according to the U.S.
Department of Agriculture (USDA).

The U.S. supplied nearly 94 percent of China's corn imports
in the first 10 months of 2013.

China already allows imports of 25 different GMO corn
varieties and is considering adding other commonly cultivated
kinds to the list, including Agrisure Viptera, which has been
pending approval for about 18 months.

Designed to offer enhanced protection against crop-damaging
insects and widely grown in the U.S., it was expected to get the
green light later this year or in 2014, according to traders.

A bulk corn shipment from Argentina was cleared for import
earlier this year despite it containing traces of MIR 162.

The latest possible rejection comes as Beijing gets into
full swing stockpiling its domestic corn harvest in the major
growing provinces in the northeast, aiming to shore up domestic
prices and help farmers.

Beijing is offering subsidies to feed mills in buying
domestic corn due to tight storage capacity. Domestic demand has
been weakening, while the country, the world's second largest
corn consumer, is expected to harvest a record crop this year.

Government stockpiles are expected to double to around 60
million tonnes in 2013/14 - nearly 30 percent of the country's
annual consumption.

China turned into a net corn importer in 2011 as domestic
production failed to meet rising demand driven by more meat
consumption as the country urbanises.

The U.S. historically is the world's top supplier of corn,
exporting between 10 and 20 percent of its harvest each year.

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